Starbucks (SBUX) shocked the public with its preliminary fourth quarter results released on Tuesday afternoon.
The company reported quarterly sales of $9.1 billion, down 3% year over year, and earnings per share of $0.80, down 24%.
Starbucks also suspended its full-year 2025 outlook to allow time for the transition to new CEO Brian Nicol and re-strategy. Shares quickly fell 3% in post-market trading.
Fourth-quarter U.S. same-store sales were down 6% year-over-year, with foot traffic down 10% and average tickets up 4%.
In-app promotions and sales are heavily advertised, but the situation remains the same. The company’s pairing menu, which offers U.S. customers a croissant or breakfast sandwich and a small coffee for $5 or $6, “did not improve customer behavior,” according to the release.
Starbucks China’s same-store sales fell 14%, foot traffic fell 6%, and average ticket count fell 8%. The company attributed its performance to “intensified competition and a soft macro environment that impacted consumer spending.”
Prior to this report, Starbucks stock had risen 3% since the beginning of the year, but has risen in the past six months as investors have grown more optimistic about the appointment of former Chipotle (CMG) CEO Nicol. It rose by 10%. The company still plans to release formal fourth-quarter and full-year 2024 financial results after the market closes on Oct. 30.
The numbers indicate a long road ahead for Nicol as he tries to get Starbucks back on track. He began a leadership shakeup, including bringing in longtime friend Treci Lieberman as global chief brand officer. Mr. Liberman will take up his role on November 4th after most recently serving as CMO of Yahoo.
In a video posted on Starbucks' site, Nicol discussed several of the key issues he outlined in his letter in the first week, including the need to simplify the menu, correct pricing and value perception, and build repeat customer base. I once again emphasized that.
“We’re fundamentally changing our marketing. Instead of talking to all of our customers, we’ve been focusing on Starbucks Rewards customers. As you’ve probably noticed, we’re rapidly ,” said Nicol, who is known for his career. Marketing expertise.
“I believe that our problems are very solvable and that we have great strengths to build upon.I have spent my career understanding, managing, and building brands, and the Starbucks brand It is clear that it is powerful and durable,” he added.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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